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End of attention

Item 1

Item 1 asks for details and total values of the three main business activities carried out with international related parties, and the three principal foreign locations for each. If you had fewer than three business activities with related international parties, or any of those dealings in fewer than three locations, list only those that apply.

The appropriate code is the code best describing the international business activities giving rise to or underlying the international dealings. It will not necessarily be the same as the code describing your general business activity or the types of transactions between the parties.

Where your business is divided into divisions, or business segments, which are reasonably in accordance with industry codes, these divisions may also be an appropriate basis for responding to this item.

You are not expected to conduct a detailed financial analysis to answer item 1. A reasonable degree of estimation is sufficient.

In the first column, at A, F and K write the appropriate industry codes that describe the three main business activities giving rise to, or underlying, the dealings carried out with international related parties. List these codes in descending order of total dollar value.

In the second column, at B, G and L write the value of the activities with international related parties for each of the industry codes. The value of the activities is the total for all locations for each underlying industry code. If part of the value of the activities is attributable to loans, this amount should not be included in the total value for each industry code.

Print the foreign location code - from appendix 1 - for the three principal foreign locations involved in each industry code. If there are fewer than three locations for any industry code, list only those that apply. List the location codes in descending order of dollar value.

Example 1

An Australian manufacturing and holding company has three subsidiaries, located in Thailand, Singapore and Indonesia. The following international business activities occurred during the year:

The Thai subsidiary manufactured household appliances that were purchased by the Australian parent company for wholesale distribution. The value of these purchases was $50,000.

The Singapore subsidiary manufactured electrical components for distribution in Australia and South-East Asia. During the year, the Australian parent company purchased finished components for re-sale. The parent company also carried out product design projects on behalf of this subsidiary. The value of the products purchased was $900,000, and the value of the design work carried out by the Australian parent company was $40,000.

Dealings that the Australian parent company had with the Indonesian subsidiary consisted only of a loan to that subsidiary and the receipt of interest on the loan. The value of the loan was $250,000 and $25,000 interest was received. The loan was to enable the Indonesian subsidiary to undertake market research in Indonesia.

Select the code for the Australian parent company's underlying international businesses as follows:

purchase of finished goods from its subsidiary for resale - industry code 34940

Indonesia (location code IDN): the business activity giving rise to, or underlying, the loan was market research and the most appropriate industry code is market research service - industry code 69500.

The Australian parent company completes item 1 as follows:

A

34940

B

950,000

C

SGP

D

THA

E

F

69230

G

40,000

H

SGP

I

J

K

69500

L

25,000

M

IDN

N

O

The company writes the interest amount at L. The loan is not included in the total value for this industry code.

As there is no other market research activity with international related parties, the interest is the only amount written at this label.

Example 2

An Australian parent company has subsidiaries in New Zealand (location code NZL), Thailand (location code THA) and the United States of America (location code USA).

The company has three identifiable divisions:

chemical products manufacturing - industry code 18990. The related-party dealings by this division total $120,000 across all three locations

agricultural chemicals wholesaling - industry code 33230. The related-party dealings by this division total $200,000 across all three locations

mining and oilfield services - industry code 10900. The related-party dealings by this division total $700,000 across all three locations.

International transactions between the Australian parent and its foreign subsidiaries can be reasonably attributed to the divisions' business activities.

Use codes from the Business industry codes 2009 (available on our website) at A, F and K and the appropriate location codes from appendix 1.

A

10900

B

700,000

C

NZL

D

THA

E

USA

F

33230

G

200,000

H

USA

I

NZL

J

THA

K

18990

L

120,000

M

THA

N

NZL

O

USA

Example 3

An Australian company carries out a food manufacturing business - industry code 11990 - through a permanent establishment in New Zealand (location code NZL).

The company's head office in Australia carries out research in the Asia-Pacific markets for food and confectionery - industry code 69500. This information is used in its New Zealand business.

In the accounts a monthly charge of $200,000 is made by the head office to the New Zealand business for the marketing service. For this income year, the head office made 12 such monthly charges.

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